ASEAN5 s economies have held up very well despite the global economic down turn, with domestic spending as the main driver.

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2 ASEAN5 s economies have held up very well despite the global economic down turn, with domestic spending as the main driver. Average GDP growth Unit: %YOY Contributions of GDP growth of 2012 Unit: % Statistical discrepancy Net exports Change in inventories Fixed investment Government consumption Private consumption *G3 includes US, Eurozone and Japan Source: EIC analysis based on CEIC and IMF 1

3 A combination of low unemployment and stable inflation provides a strong platform for robust consumer spending. Unemployment rate, Unit: % Inflation, Unit: % Source: EIC analysis based on CEIC and Bloomberg 2

4 Higher emphasis on social safety net programs help reduce the needs for precautionary savings. Government expenditure on health care services, Unit: Millions of USD 11,000 = CAGR ,000 9, % 8,000 7,000 6,000 5, % +9% 4,000 3,000 +9% +11% 2,000 1,000 0 Malaysia Philippines Singapore Thailand Source: EIC analysis based on World Health Organization (WHO) 3

5 The share of middle classes has risen significantly across ASEAN5 in the previous decade. Middle class population (as defined by OECD) Unit: % Mid-1990s Latest year* Malaysia Philippines Thailand Latest:,2011; Malaysia,2009; the Philippines,2009; Thailand,2009 Gross National Income (GNI) per capita, Unit: USD +8% 9,000 8,000 7,000 6,000 5,000 4, % 3,000 2,000 1,000 0 Malaysia = CAGR % +10% Phillipines Thailand Source: EIC analysis based on OECD and World bank 4

6 The emerging middle class also has important implications on the demand structure. ASEAN5 s shares of consumer expenditures, 2011 Unit: % Share of consumer spending on hotel and leisure activities, 2011 Unit: % 8% 4% 13% 4% 8% 2% 10% 4% 12% 7% 16% Malaysia 24% 52% 34% 56% 47% 5% Philippines 62% 36% 48% 34% 34% 18% Singapore Malaysia Philippines Singapore Thailand Durables Semi-durables Non-durables Services Source: EIC Analysis based on Euro Monitor and Credit Suisse 5

7 ASEAN s tourism has grown steadily, with intra-asean travel gaining more importance Number of travelers visiting ASEAN5 is growing steadily. International travelers visiting ASEAN5 ( ) Unit: Million persons CAGR % Extra-ASEAN CAGR Extra-ASEAN % Intra-ASEAN CAGR Intra-ASEAN % Source: EIC analysis based on CEIC 6

8 While air connectivity within ASEAN seems satisfactory, its ground transport is in need for an upgrade. BKK, KL and SG serve as three main hubs for ASEAN traveling Number of direct routes to ASEAN destinations Ground connectivity remains a challenge for most ASEAN countries Score marked by WEF (1-7) Singapore Malaysia Thailand Air transport Rank Singapore Ground transport Rank Vietnam Brunei BKK, KL and SG has direct route to at least one destination in ASEAN country. Malaysia Thailand Philippines Lao 8 Cambodia 8 Philippines Myanmar 6 Average Rank of 49 ASEAN5 Ex Singapore 72 Source: EIC Analysis based on World Economic Forum (WEF) 7

9 Facilitating the mobilization of tourist workers is important, given diverse demographics among ASEAN5. Labor forces growth rates are high in most ASEAN 5 except Thailand Population and Labor force growth rate Singapore Philippines Population Malaysia Unit: Percent per annum Labor force Thailand Asia s Labor force growth rate 1.0% Asia s Population growth rate 0.7% ASEAN peaks of working age population Index : 2010 = 100 ASEAN-7 peaks in 2042 Peaks in 2036 Thailand peaks in 2018 Philippines peaks in 2077 Malaysia peaks in 2063 Philippines Malaysia ASEAN-7 Singapore Thailand Note: ASEAN-7 refers to, Malaysia, Philippines, Thailand, Singapore, Vietnam and Myanmar. Source: EIC Analysis based on data from International Financial Statistics (IFS), World Bank, UN 8

10 ASEAN s MRA regarding tourism professionals is a step in the right direction but it is just a first step. EIC s cross-border labor movement facilitation framework Hardware 1 2 Skills and capabilities Software Mindset and attitude Individual level Mandatory skills and capabilities required for each profession to excel, including abilities to communicate effectively Individual s preference on working in foreign operations 3 4 Business opportunities Corporate culture Corporate level Corporates demand for foreign talents that arises from cross-border business opportunities Corporate culture conducive to attracting and integrating foreign employees, and creation of workplace that blends and respects diversity 5 6 Rules and regulations Environment Government level Facilitation of labor movement through sets of rules and regulations Creation of conducive multi-national environment and provisioned support provided to both individuals and corporates to facilitate labor movement Source: EIC 9

11 Conclusion The favorable macroeconomic outlook and the long-term structural economic changes underpins robust domestic demand. This is likely to create a demand spillover to intra-asean tourism. But, to fully seize these opportunities, ASEAN must overcome their supply-side limitations These challenges include lack of upgrade on the connectivity infrastructure and the possible shortage of tourist workers. 10

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